Adding Warrants as a 'Sweetener' to Bonds Will

question 17

Multiple Choice

Adding warrants as a 'sweetener' to bonds will:

• A)reduce the value of the bond.
• B)increase the coupon rate of the bond.
• C)increase the value of the bond.
• D)make the bond more risky.

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Definitions:

Negotiable Instrument

A paper confirming the promise to pay a certain sum of money, either immediately upon request or at a predetermined date, with the identity of the person making the payment specified on it.

Oral Negotiable

A verbal agreement that is intended to be binding but may lack the formal requirements of a written contract, particularly in the context of negotiable instruments.

Maker Or Drawer

The individual or entity that creates or signs a promissory note, check, or draft, promising to pay a certain sum.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States intended to harmonize laws across the states.